A Shale-Gas Bonanza
Obama’s State Department is pitching the new hydrofracking
technology worldwide, and Halliburton is delighted.
The National Journal
18 November 2010
By Coral Davenport
Over the past two years, a controversial new drilling technique has
unlocked massive reserves of U.S. natural gas, transforming the
prospects for domestic energy production. The State Department has
begun promoting the technology abroad, saying that if it were adopted
in China, Eastern Europe, and India, it would boost exports,
significantly reduce Russian and Middle Eastern influence in those
regions, and fight climate change. Still, many environmentalists are
unimpressed.
“The reason for doing this is that we think that shale gas can be the
kind of game-changer in the global energy market that it has been in
the U.S.,” David Goldwyn, the State Department’s coordinator for
international energy affairs, told National Journal. “For
energy-security reasons, we’re interested in having countries like
China and India and Eurasian countries develop their own means so they
don’t get it from countries of concern for the U.S.”
The United States was the first and, until very recently, only country
to use the aggressive technique called hydrofracking, which combines
hydraulic fracturing—essentially, injecting a cocktail of sand and
chemicals into the ground—and horizontal drilling. American geologists
have known for years that rock formations beneath Louisiana,
Pennsylvania, and western New York contained vast domestic stores of
shale gas. But without the right technology, it was too expensive to
extract, and so the country faced a future of high natural-gas prices
and heavy imports from Russia.
Hydrofracking changed all that, offering the prospect of an abundant
domestic supply of clean-burning fuel with about half the carbon
emissions of coal. The technology also comes with significant risk,
however. Environmental groups and people who live in places where
hydrofracking has begun say that the process—which is not subject to
federal regulation—pollutes water supplies. Efforts are afoot in
Congress and at the Environmental Protection Agency to rein in the
industry.
The State Department, meanwhile, sees geopolitical opportunities in the
prospect of newly accessible natural-gas resources around the world and
aims to make the most of them. By promoting new methods of exploration
and extraction, it seeks to make other countries less dependent on
imported natural gas. In India and China, in particular, the State
Department hopes that new discoveries of gas deposits could replace
coal and reduce emissions from coal use.
Last November, the United States signed a memorandum of understanding
with China, laying the groundwork for U.S. Geological Survey scientists
to begin mapping Chinese shale deposits and training Chinese geologists
to do the same. In August, the State Department hosted a two-day
international conference on shale-gas exploration; representatives from
17 countries and some of the biggest U.S. natural-gas-drilling firms
attended.
During President Obama’s visit to India earlier this month, he signed
another memorandum of understanding, agreeing to send U.S. geologists
to look for Indian shale gas. In the next six months, the State
Department will host delegations from Georgia, India, Morocco, and
Poland, taking the visitors to hydrofracking sites and sponsoring
seminars on how to manage and regulate the industry.
Poland, which today imports about two-thirds of its natural gas from
Russia, has already jumped at the opportunity. The government has begun
leasing land for shale-gas hydrofracking, and drilling could start
before the end of the year—the first project of its kind in Europe. “At
the State Department conference, the Polish folks were celebrating the
entire time,” said Chris Tucker, a spokesman for Energy in Depth, a
consortium of companies involved in shale-gas development.
Interest is likewise high in China, which has had tense relations with
the U.S. over its ballooning emissions from coal-burning power plants.
Low-carbon natural gas could help China reduce its emissions without
coercion from the U.S. or any slowdown in its economic growth.
Against all this enthusiasm, environmentalists point out that despite
the low-carbon benefits of natural gas, hydrofracking may have
potentially devastating ecological effects—a concern that could sharply
escalate if the method is deployed in countries with loose regulatory
schemes. State Department officials say that they complement their
natural-gas outreach with plenty of education about how to do
hydrofracking safely and how to implement regulations. “The countries
that we’re engaging are also moving ahead on their own,” Goldwyn said.
“We’re trying to intercept that wave and let them know what they need
to do as governments.”
For now, the opportunity appears to outweigh the worries. State
Department officials and natural-gas-industry leaders say that another
benefit to the push, although not its primary aim, will be new markets
for the American companies that provide the technology. One likely big
winner is Halliburton, which invented hydraulic fracturing. Some in the
industry remarked on the irony of that alliance, recalling that the
company—still under fire for its role in the BP oil spill—has a notably
tense relationship with the Obama administration.
“This is a pragmatic administration that wants to get things done,”
said Michael Levi, an energy analyst with the Council on Foreign
Relations. “They’re not going to stop just because Halliburton will
make a lot of money.”